Idaho Debt Relief: Your Guide to State Laws and Managing Debt
Idaho, a state that just over 1.7 million people call home, is a relatively affordable place to live, with a cost of living that is lower than most other states in the country.
But just because Idaho is a relatively affordable state doesn’t mean all of its residents have flawless habits when it comes to managing their money. After all, getting into debt can happen to anyone at any time, regardless of their income and the cost of living where they’re located. When it comes to credit, Idahoans have an average credit score of 683.8, which is slightly lower than the national average.
If you live in Idaho and find yourself struggling to get out of debt, you’ve come to the right place. In this article, we’ll cover everything you need to know about managing debt in the Gem State. We’ll look at Idaho’s debt statistics, laws regarding debt in Idaho and options available for those who need professional help managing their debt. We’ll also provide tangible advice for paying off your debt and filing for bankruptcy in Idaho, if that’s your best option.
- Debt in Idaho: At a glance
- Debt collection in Idaho
- Idaho debt relief programs
- Payday lending laws in Idaho
- Tips to tackle debt in Idaho
- Filing for bankruptcy in Idaho
- The bottom line
Debt in Idaho: At a glance
In Idaho, the per capita balance for credit card debt is $2,830, while the average per capita mortgage balance exceeds $32,000.
Something to note about Idaho debt struggles: Because there is no limit on how much interest payday lenders in the state can charge, borrowers in Idaho seeking small amounts of money quickly to tide them over until their next payday could be hit with one of the highest average payday loan interest rates in the country at 652%. More on that option a bit later.
Below, you’ll find a breakdown of debt statistics for Idaho.
|Type||Per capita balance, 2018||Rank out of 50 states*||U.S. per capita balance|
|Credit card debt||$2,830||32||$3,220|
|Student loan debt||$5,050||32||$5,390|
|*No. 1 is highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019
Debt collection in Idaho
If you’re dealing with a significant amount of debt, it’s important to know what the debt collection laws are in your state, and whether they protect the consumer. Debt collection laws vary widely by state: some offer no homestead exemptions, for example, while others offer unlimited exemptions for home equity.
Overall, debt collection laws in Idaho are fairly protective of the consumer. Below, you’ll find specific details on debt collection laws in Idaho:
- Seventy-five percent of your wages are protected from garnishment.
- The homestead exemption is $100,000, which means this is the amount of equity in your home that cannot be jeopardized due to a judgment.
- The amount of equity protected per vehicle is $7,000.
- A bank account exemption of $800 means this amount is protected in the event that the bank needs to levy your account.
In addition, the federal Fair Debt Collection Practices Act (FDCPA) protects consumers in Idaho. Under the FDCPA, debt collectors cannot behave in an abusive or unfair manner. They also cannot make false, deceptive or misleading statements, and must cease contact with a debtor once he or she makes a request for communication to stop.
Responding to collection letters
Every time you check your mail, your heart races. Nearly every day, you receive a letter from a third-party collection agency looking to collect on a debt you owe.
You’re not sure what to do, so you’ve been ignoring these letters. They’re piling up so quickly you now have a stack several inches high. But letting collection letters pile up is actually the opposite of what you should be doing.
If you’re receiving debt collection letters or phone calls, here are some best practices to keep in mind:
- Communicate. Whether you’re getting letters from your creditor or a third-party collection agency, the most important thing you can do is communicate. Keeping those lines of communication open — whether it’s telling your creditor why you can’t make your payments, sending a letter asking it to stop contacting you or attempting to negotiate the debt — will help make the entire process smoother.
- Verify your debt. One of the first things you should do is validate your debt to ensure it’s accurate. This can be done by sending a letter to the collection agency asking for proof of the debt, as well as the name of the original creditor. It’s important to do this to ensure the debt in question is legitimate and isn’t past the statute of limitations (more on this below).
- Know what not to do. Although it’s wise to communicate with your creditor or the collection agency, it’s important to not give away certain information in the event that you’re dealing with a scam. You should never give a collection agency access to your bank account information, for example.
- Know your rights. If you think a creditor or collection agency is not acting within reason, review the FDCPA to know your rights. Debt collection agencies cannot threaten you, lie to you or falsely state that you’ll be arrested for failing to pay your debt, according to the FTC. They also cannot contact you before 8 a.m. or after 9 p.m.
- File a complaint, if necessary. If you think a collection agency is not acting within its legal rights, you can contact the Idaho Office of the Attorney General, the FTC or the Consumer Financial Protection Bureau (CFPB) to file a complaint. To file a complaint, you can contact the Idaho Office of the Attorney General using this link, or by mail, at the following address:
Office of the Attorney General
700 W. Jefferson St.
P.O. Box 83720
Boise, ID 83720-0010
To file a complaint with the CFPB, you can follow this link.
Understanding Idaho’s statute of limitations
Each state has a statute of limitations on debt, which means certain types of debt can only be pursued by collection agencies in court for a certain amount of time. Although creditors and collection agencies must stop attempting to sue a debtor once the statute of limitations has been reached, they can continue sending letters or calling the debtor in an attempt to collect the debt.
Establishing the specific statute of limitations on a particular debt can be complicated and nuanced. But it’s important to figure it out in the event that a creditor or collection agency is threatening to sue you when they’re not within their legal right to do so. If you’re not sure what the statute of limitations is on a particular debt, consider contacting a nonprofit credit counselor for advice.
Below, you’ll find the statute of limitations on various forms of debt in the state of Idaho.
|Idaho Statute of Limitations on Debt|
|Mortgage debt||5 years|
|Medical debt||5 years|
|Credit card||5 years|
|Auto loan debt||4 years|
|State tax debt||12 years|
|Private student loan debt||5 years|
Idaho debt relief programs
If you need help managing your debt, there are countless national and state-level nonprofits that can help you. For example, American Consumer Credit Counseling (ACCC) is a national organization that offers debt management assistance for Idahoans. In addition, Debt Reduction Services is one credit counseling agency in Idaho that has been approved by the federal government.
You might see websites that say “Idaho Debt Relief” or “Debt Consolidation Idaho,” but make sure these are nonprofit credit counseling agencies, not debt settlement companies. Debt settlement companies are for-profit organizations that attempt to negotiate your debt on your behalf.
It’s not uncommon to encounter scams, so look out for any deals that seem too good to be true or have upfront fees. When searching for a company that will help you manage your debt, check for nonprofit status and look up the organization on the Better Business Bureau.
Payday lending laws in Idaho
Payday loans can offer consumers access to a small amount of cash in a pinch. Many people pursue payday loans when they need a few hundred dollars to get them by until their next paycheck. However, these loans typically come with very high interest rates and less-than-favorable terms, not to mention payday lending is an industry known for being rife with scams.
If you need cash quickly, it’s best to avoid payday loans. But in the event that you do wish to pursue one, you should be attuned to Idaho’s laws regarding payday lending.
There are some consumer protections in place for payday lending in Idaho. In fact, the state made changes to the Idaho Payday Loan Act in 2014 to offer additional protections for consumers. However, as mentioned, there is still no limit on how much interest payday lenders in Idaho can charge. Because of this, the state has one of the highest average payday loan interest rates in the country — 652%. In 2017 alone, Idaho residents paid $31 million in overdraft bank fees related to payday loans.
Below, you’ll find everything you need to know about protections for consumers when it comes to payday loans in Idaho.
- Maximum loan amount is $1,000 and/or 25% of a borrower’s gross monthly income.
- Payday lenders cannot present a borrower’s check for payment more than three times.
- Payday lenders must provide extended payment plans in the event that a borrower needs one.
- Borrowers can request an extended payment plan once every 12 months.
In addition, the Idaho Payday Loan Act has measures in place that prohibit predatory lending. Payday lenders must hold a license with the state’s Department of Finance. In addition, payday lenders cannot engage in unfair or deceptive behavior, accept anything (such as a property) as collateral, renew a payday loan more than three times, impose any fees other than the finance charge or accept payment for a payday loan through another payday loan from the same lender.
Tips to tackle debt in Idaho
If you’re looking to pay off your debt once and for all, from debt consolidation to a balance transfer credit card, there is likely a suitable debt-payoff solution for you, regardless of the amount and type of your debt.
Below, we’ve broken down some of the most common strategies for paying off debt.
Consolidate your debt
If you have significant high-interest debt to pay off, one of the best strategies to consider is consolidating that debt. Debt consolidation involves combining all of your debt and taking out a debt consolidation loan — a type of personal loan — to pay off that debt. And Idahoans are among the three highest users of personal loans for debt consolidation, with over 35% being used for that purpose, our research found.
Debt consolidation has its pros and cons: It will likely allow you to save money, as interest rates on these loans are typically lower than they are on credit cards and other forms of high-interest debt. This type of loan will also streamline and simplify the debt repayment process, as you’ll only have to make one monthly payment. However, although most consumers can qualify for a debt consolidation loan, it could be difficult to secure a loan with a good interest rate if you have subpar credit.
If you’re primarily struggling with mortgage or auto debt, you could consider refinancing your auto loan or home loan in order to secure a better rate. If you’ve improved your debt-to-income (DTI) ratio and credit score since you initially secured your loan, this could be a path worth pursuing.
But it’s important to keep in mind that refinancing is only worth considering if you’ll be able to secure a significantly better interest rate, as there are often hefty fees associated with a refinance.
You can also refinance student loan debt, though there are additional caveats to keep in mind with that as well. When you refinance your federal student loans, you’ll no longer have access to federal loan forgiveness programs or more flexible repayment plans.
Use a balance transfer card
If most of the debt you hold is on high-interest credit cards, you could consider opening a balance transfer credit card. These cards typically come with introductory 0% interest rates that allow you to pay off your debt without interest for a set period of time. Balance transfer credit cards are ideal for those who hold around $3,000 or $4,000 in credit card debt, or any amount they can realistically pay back in around one year. Keep in mind, too, that you often need a very good credit score to qualify for a balance transfer credit card.
The introductory rate grace period on a balance transfer credit card can be anywhere from six to 21 months, though most are around six months to one year. If you’re determined to pay off your debt within this introductory rate time frame, a balance transfer credit card is a great option. But if you’re not fully committed to paying it off, it could have the opposite of its intended effect. That’s because if you fail to pay off your balance within the introductory rate time period, you could be forced to pay retroactive interest on your entire balance. Also know that many cards charge balance transfer fees.
Create a debt management plan
For some people, being in debt is nothing new. Many people struggle with debt for years, if not decades, all because they never learned how to properly manage their money.
If this is you, you might want to consider contacting a nonprofit credit counseling agency. A credit counselor can help you come up with a debt repayment plan in which you’ll make one monthly payment to the agency, which will then disburse that money to your creditors. Nonprofit credit counselors will also teach you about how to incorporate healthy financial habits into your life.
One of the best ways to get started is to find a nonprofit credit counselor in Idaho that is certified with the National Foundation for Credit Counseling (NFCC).
Filing for bankruptcy in Idaho
Perhaps you read about the above debt payoff strategies and nothing felt like a good fit for you. Your debt is too substantial for any of those plans. You don’t expect to be able to pay it off in two or three years, let alone five or 10. If this sounds like you, there is one last-resort option you can consider: bankruptcy.
Bankruptcy should not be taken lightly, as it will have a deleterious impact on your finances in the immediate years following the filing, if not longer. After all, data shows that consumers who have filed for bankruptcy typically have to pay more for loans in the years following their bankruptcy.
But if bankruptcy is your only option, you shouldn’t feel shame or guilt. Bankruptcy is fairly common in the United States. In fact, over 740,000 Americans filed for bankruptcy in 2018 alone. Bankruptcy does occur in Idaho, but it’s not prevalent — in 2018, there were 3,655 bankruptcy filings in Idaho, according to the American Bankruptcy Institute.
If you are considering bankruptcy, the most important thing is to be educated on the basics. There are two forms of consumer bankruptcy: Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, all of your debts will be discharged, but you will lose everything. In Chapter 13 bankruptcy, you’ll be able to keep some of your assets, but you’ll be on a strict repayment plan. Chapter 7 bankruptcy typically lasts three to six months, whereas a Chapter 13 repayment plan lasts from three to five years.
In Idaho, the cost to file for bankruptcy is $335 for Chapter 7 and $310 for Chapter 13. The forms to file for bankruptcy in Idaho can be found here. If you need help filing, you can also consult this database of consumer bankruptcy lawyers in Idaho.
The bottom line
For many people, being in debt can lead to a significant amount of stress. If you’ve been in debt for years, you might not even remember the peace of mind that accompanies being debt-free.
Luckily, for those in Idaho, there are myriad resources available to help you pay off your debt quickly and efficiently. Use the above guide to get started and you’ll be on your way to financial freedom in no time.
The information in this article is accurate as of the date of publishing.